Tuesday, February 3, 2015

Portfolio Review

In 2014 my brokerage account increased in value by 12.17% (which breaks down to 9.69% from price increases and 2.48% from dividends). This compares to a 13.44% return (11.38% price, 2.06% dividends) for VOO (Vanguard's S&P 500 ETF). So my absolute performance was worse but my relative performance was better than in 2013. I still lagged the market however. As in 2013 this was primarily because I wasn't fully invested and secondarily because my stock and ETF picks underperformed. Ironically while I bought 3 stocks during the year (dropping my cash position from 9.51% to 6.59%) they all lost money so I would have better off staying in cash.

Ensco PLC (ESV) which I bought early in the year was my worst performing stock with a total return of -33.92%. I also bought two foreign banks near the end of the year, Westpac Banking (WBK) a big Australian bank and Bank of Nova Scotia (BNS) a big Canadian bank. They were both down at year's end, -3.45% and -1.38% respectively.

I didn't make any other changes. My existing positions tended to either significantly underperform or outperform. In the underperforming group were my other energy picks, VDE, XOM and COP which had total returns of -9.97%, -5.98% and 1.77% respectively. Also underperforming were BBL (-26.88%), IBM (-12.20%), CAT (3.58%) and JPM (9.68%). IBM continues to struggle so being forced to sell most of my position has worked out well so far.

VYM (13.38%) basically matched the market.

On the positive side my utilities outperformed in 2014. ED was up 23.97% and PSEG was up 33.86%. Similarly VNQ (another interest rate sensitive pick) was up 29.99%. These positions had underperformed badly in 2013. Two more solid outperformers were TGT (22.98%) and my other US bank WFC (23.72%). Aetna (AET) my best position in 2013 continued to do well (up 30.82%). My best performing stock in 2014 was Intel (INTC) with a total return of 43.29%.

Stock prices of course fluctuate however the dividend stream a diversified portfolio provides should be more stable and hopefully will increase over time. In this regard my dividends (weighted by my initial 2014 positions) increased by 8.29% for 2014 versus 2013.